Party Likes It's 2009

I don't know if anyone else feels this way, but I've been having a strange feeling of deja vu and I couldn't seem to place it. I was standing there this morning, making some coffee, when it hit me. This is late 2009 all over again. If you were trading and stacking back then, I'm sure you'll recall that painful period. If not, let me give you a little refresher.

Where were you in late 2009? Were you listening to this:

Or in line to see this:

I know where I was...I was making some serious cash. In July of 2009, gold was trading in the low $900s. By Thanksgiving of that year it was near $1200 and Turd was flush (no pun intended). And I will never, ever forget where I was when gold peaked. I was reading ZH and watching Fox Business when I saw gold trade at 1225 and read a headline on ZH that the Bundesbank was going to be announcing a huge gold purchase in the morning. My personal sentiment indicator went to 10+. Unfortunately, that didn't work out so well. Beginning the next day, gold began to roll over, instead, and by the first Friday of December, I was doomed. The BLSBS report came out and was spun into good news. Dreams of "green shoots" and a "recovery summer" soon took over. The POSX shot higher and, over the next 3 months, rallied nearly 10% from 74 to 81.

The resulting decline in gold was brutal. First, it had peaked at $1226 and Santa had promised an "angel" at $1225 for years. The fact that I'd let greed overcome me and consequently didn't sell at $1225 was crushing and when gold rolled back down through $1100 in January, I was seriously depressed. All of the same old AGAs were claiming that $1225 was a blow-off top and that gold was soon going to be trading back below $1000 and was probably headed back toward $800. I was sick, Mister Hyde was furious and it seemed like all was lost.

But we didn't quit, we didn't give up. I knew that the whole "recovery summer" thing was a joke. The U.S. economy wasn't going to recover, the best it could do was stagnate and limp. The MOPE and the SPIN were so thick, I could barely breathe and when gold bottomed at $1052 in February of 2010, there was hardly anyone around who noticed or even cared. And that's the funny thing about bottoms, you rarely, if ever, notice them in the present as they are only visible in hindsight. With hindsight, we now know that the "green shoots" of 2009 became the dead weeds of 2010. All of the breathless proclamations by LIESman et al not withstanding, the facts, the math and reality took hold again by mid-2010 and gold finally surged back to the $1225 level in May and through $1225 in September.

paper_3-21amgold09.jpgpaper_3-21ampig09.jpg

My point is simple: We are currently in an identical situation. Gold surged to $1925 last September and, on 9/6/11, gold was ready to rocket higher on news that the SNB was going to devalue the Swissie by 10%. Again, sentiment was at the 10+ level and, again, we were within a few dollars of a Santa "angel" at $1936. Well, we all know what happened next and now, after six months of this brutal "correction" where gold has again fallen 15% while the POSX has rallied 10%, we are once again staring into the Pit of Despair. LIESman et all are screaming from the rooftops that the economy is improving and The Bernank is desperately implying that QE is over. Well, I call "bullshit" and I'm standing tall against them. Will you join me?

As I type, gold is at $1632 and silver is at $31.43. I've been maintaining all month that gold would likely bottom between 1600 and 1650 and that silver was headed to 31, maybe even 30. Why would anyone panic now when we are so close to the bottom. Always remember and never forget: THE ONLY WAY YOU WILL CONSISTENTLY MAKE MONEY TRADING GOLD AND SILVER IS TO BUY WHEN EVERYONE ELSE IS SELLING AND SELL WHEN EVERYONE ELSE IS BUYING. Period. Why is this true? Because this strategy essentially puts you on the same side of the trade as The Cartels, which as you know post-MFG, are exerting an increasing level of influence on the paper metal markets. It is clear to me that now --right now-- The Cartels are buying and covering not selling and adding. I discussed this yesterday in two, separate comments to the previous thread and they are reprinted below:

Back at the last highs of 2/28, total gold OI was 479,044. As of Monday's close, it had fallen to 434,226 for a drop of 9.35%. The last time gold total OI was at this level was 2/14/12 when price closed at $1718. Additionally, even back in January, we find higher total OI numbers. The week of 1/16 averaged total OI of about 439,000. Gold began 2012 with a price near $1600 and a total OI of 420,000.

Back at the price highs of 2/28, total silver OI was 115,866. Total OI was actually higher on 2/24 at 118,204. As of Monday's close, it had fallen back to 108,268 but actually bottomed back on 3/15 at 106,723 or a drop of 9.71%. The last time total silver OI was below 107,000 was 2/17/12 when price was $33.28. Total silver OI averaged about 103,000 in January after beginning the year at almost exactly this level, near 106,000.

Clearly, any "excess" open interest brought about by the early year rallies from 1600 to 1800 and 28 to 37 has now been wrung out. Again, this is just another signal that we are very near a bottom.

Crazy silver OI report basis yesterday.

Yesterday, gold was down $20.20 and total OI was down 3,200 contracts. Perfectly normal.

Silver, however, was down $1.12 yet total OI expanded by 3,154 contracts. ​ The July12 alone went from 12,404 to 14,018. The only deduction that can be made is that a significant amount of new shorts entered the silver pit yesterday. What we don't know is whether it was Cartel or spec shorts. The CoT on Friday will provide some clues but it is highly likely that these are spec shorts. Why? Because The Cartel typically only adds shorts to:

  1. Cap price    OR
  2. Attempt to start a waterfall/cascade selling event.

If only now we are seeing a huge run-up in spec shorts then we truly are very close to a bottom as the late-coming spec shorts will soon be fleeced just like the late-coming spec longs were fleeced on 2/29.

Total silver OI is now back to where it was two weeks ago, when silver was almost exactly $1 higher.

Ahead of the CoT on Friday, here is what we know:

Gold for the week 3/13--3/20 saw the total OI fall from 442,319 to 431,039 while price fell by $47 (2.77%).

Silver for the week 3/13--3/20 saw the total OI only fall from 111,730 to 111,422 while price fell $1.75 (5.2%).

Likely Conclusion: This week's CoT will be slightly bullish for gold but will show a significant improvement in the CoT picture for silver.

Anyway, the point is that is is always darkest before dawn and we are very deep into the wee hours. The global economies have not and will not improve to the point where we can "grow our way out from under the debt". No way, no how. In 2010, it took 6-8 months before logic, math and facts finally prevailed over hope, MOPE and SPIN. The truth will win again in 2012, you just have to be patient.

One more thing, I received some communication from "Winston" this morning and he provided some very helpful information. He is of the belief that the down move that began Tuesday evening and continues this morning is almost entirely related to April gold option expiration. Again, the Comex is now almost completely controlled by The Cartel as the only participants left are Cartel monkeys and HFT-WOPR momentum chasers. This allows The Cartel, which has full knowledge of the order books for both futures and options, the ability to swing price at their leisure and position price in such a way as to maximize pain for option holders upon expiration. Winston believes that the current target of their malice are not only the call buyers but also the out-of-the-money put sellers for April. Remember, gold was near $1800 just 4 weeks before expiration of the April options. A lot of traders believed that there was easy money to be made by selling out-of-the-money puts, the April 1650s and the April 1600s. Those that did are getting seriously squeezed right now and they are being forced to short actual gold contracts to hedge themselves. Winston thinks that the 22,000+ contracts between 1600 and 1650 are the true target of The Cartel here and that their ultimate intent may be to drop gold as close to 1600 as possible before expiration at the close of business next Tuesday.

What's interesting about this is how it fits right in line with all of the other "bottom signals" we've been discussing here as of late. A low near $1600 tomorrow or early next week would:

  1. Complete the drop to stout support at 1600
  2. Complete the right shoulder of a massive reverse head-and-shoulder bottom
  3. Bring silver down to 30-31, just like we'd envisioned
  4. Drop gold open interest levels all the back to early January levels
  5. Put the RSI and MACD indicators into deeply oversold territory
  6. Drive sentiment and our new TITS indicator to record low levels. Even Mister Hyde is once again suicidal and ready to simply cash out his IRA before it goes to zero. He'd like to take it in cash and go to Vegas where he can blow the rest on blackjack, Jack Daniel's and hookers.

And don't forget that lease rates have clearly bottomed and have significantly reversed. In September and December of last year, lease rates reversed about two weeks before price.

So, in the end, hang in there. I know it's tough and painful to watch everything go down when you know you are on the right side long-term. But let me assure you: This, too, shall pass. Soon...very soon...the metals will bottom and resume their inexorible march higher. Of this, you can be certain.

TF

267 Comments

GoldMania3000's picture

does gold really retain it's value

Ok. im not slamming everyone. And i know short term. But if you look at where gold was a couple of months ago hihg 1700's that would buy a certain amount of goods.. now that same amount of goods can not be purchased with the same one oz of gold. But USD can. Gold is money. Yes history has told us that.  Its nice to say what history has taught us, but the fact is, gold will be money when it's recognized as money. Fiat is king until otherwise--maybe not for long.

Someone said on the board yesterday why would you be unhappy to buy more gold at 1480 vs. 1650. well if gold retains it's value why does it matter where you buy it if it is all about buying the same amount of goods.  Doug casey keeps saying gold is not cheap..well gold still retains it's value.so it's not about being cheap or expensive it's about retaining it's value? 

perplexing isn't it.  yes easy to combat this logic,  we are all buying gold for the time when it comes when there's inflation.  and some of us buy it to profit,. so in the short term gold may not retain it's value...let's play this same game two years from now and see if my one oz of gold purchases more, less or the same

Magpie's picture

@SRCrocco

I read every comment on Turd's blog every day, including all of yours.  At this point in time, I just don't know anymore what is true, and what is not.  Please don't take this the wrong way, because I am certain you absolutely believe every word you type, and that it's your intent to inform and educate everyone here in Turdville.   How do you know, with absolute certainty, the information you're reading is true? 

I don't know yet how deep the rabbit hole goes.

Purchaser's picture

Marc Faber - If not posted

Sorry if I missed someone posting this interview. Please do listen to it. Very interesting in my view

theBuckWheat's picture

"...ready to simply cash out

"...ready to simply cash out his IRA before it goes to zero..."

Or for those of us who went long in silver-related ETFs and are now underwater, liquidating at a tax loss, take the cash and go long physical.

SRSrocco's picture

CONGRESSMEN BRAD GALVEZ RESPONDS TO MY EMAIL

THE UTAH BILL IS SILENT ON THE ISSUE OF MARKET VALUE OF GOLD AND SILVER

I wanted to make sure what was stipulated in the bill, so I emailed the one who sponsored the bill and this was his reply:

Brad Galvez brad@zevlag.com to me

The bill is silent on that issue, however, the intent is market value.  It is voluntary on both sides which helps ensure market, who would transact at face value? 

Sent from my HTC on the Now Network from Sprint!

---------------------------------------------------------

So the INTENT is MARKET VALUE, and on top of that you don't have to PAY CAPITAL GAINS on your Gold and Silver coins..

Dr G's picture

to that fat boy person who

to that fat boy person who kept posting silver will never get above $40 again.  so far his forcast has beat everyones:)

​Umm, with a call like that, he automatically loses. "Never" is a bad term to use in forecasts. Forever is a very long time. Silver above $40 in March? Unlikely. In April? Possible. You get the point.

Kuchek's picture

Going crazy with all this? Just check in

cpnscarlet's picture

@SRSrocco - Well I guess I've

@SRSrocco - Well I guess I've got to realize there is some areas where you and I disagree. You dismiss the claims of Lindsey Williams on the viability of Gull Island, but you embrace the words of Ed Dames - in my book, that's a little weird. Specifically because I see the "remote viewers" as a bunch of charlatans and they are rarely right. One good source is simply Coast2CoastAM itself - listen to the old episodes they play on Saturday from the 1990s (usually) and the predictions that never came true are legion.

HOWEVER, I do not dismiss your concerns about solar flares - a big one occurring at just the right moment can and will cause havoc. However, it's another "1 in a quadrillion" event that requires the right geometry as well as the right level of solar activity. The Halloween surprise of 2003 was the any of us have lived through and the compression of the Van Allen belts was intense (exposing many geo comsats to direct solar wond) . But even then, all the computers kept working and the power grid disruptions were minor.

I'm not saying it can't happen, I'm saying the odds that Lindsey Williams has more of an edge on future events is much greater.

Full Disclosure - I tend to believe the abiotic oil theory. IMHO, There just wasn't enough biomass to give us the oil that has already been extracted. I believe oil is cooked in the geopause between the mantle and the crust from carbon compounds and water drawn in at the various Pacific fault lines. FWIW. Now whether or not the rate of production will support the rate of use is something I'm not willing to comment on.

achmachat's picture

SRSrocco

nice!

but hey... I'm somewhere in Europe and I pay VAT on my silver.

GuerrillaCapitalist's picture

Latest Executive Order which Turd just Posted

Friends:

This latest EO from President Obama is chilling. However, I can't help but wonder if it's not intended as psychological warfare. A reminder that the government can deprive anyone (persons and corporations) of all their assets. The intended result would be for folks to just roll over in fear. The US government has been doing it for decades if not centuries. Think of the sedition statutes from the first World War, or for a more current example the seizure laws that allow a government agency to seize assets if they believe a crime has been committed. There are more cases than I can count where innocent people had all of their property seized and were exonerated in a court of law and never had their goods returned to them.

I am not downplaying this latest attack on our freedoms by any means, but I think the Feds are scared of the citizenry and are desperately trying to exert control through actions such as this EO, the NDAA and especially the Patriot Act.

I have no answers as to how to proceed from here, beyond continuing to prepare for unpleasant times. I do take some comfort that a preponderance of the military leadership, law enforcement officers and local governments are Patriots and will not violate the Constitution to enforce illegal orders. Oath Keepers is growing daily.

RRJJ's picture

For everyone that doesn't

For everyone that doesn't believe in peak oil I'm assuming you are all very bearish to gold and silver? Cheap energy (oil) is what drives our world economy and if we have an unlimited amount I really don't see any reason why the US (and Europe) can't grow themselves out of debt.

Dr Jerome's picture

Dr G good question

A good question for me to ponder and decide. Am I simply a stacker or am I a collector? I got all my morgans at spot, but none are key dates. So why keep them if they will sell at a premium now, or trade for 1 oz rounds or eagles?  but I do love to go through a stack of mercury dimes or ben franklins looking for key dates and completing coin books.

I just check the AG price for the first time this afternoon. I may have to go shopping!

pourty's picture

@GoldMania3000: does gold really retain it's value

An anecdote here, and this is just from my personal data.  I observe that, for me at least, gold and silver have done a fine job of retaining their purchasing power, but you need to look longer term than a few months or even a year.

The first silver bullion I purchased was in January 2010, I bought 10 silver maples.  They are up 41.5% since I purchased them.  Inflation since that period of time (according to shadowstats) is somewhere on the order of 12-18%.  So I have more than retained my purchasing power over 2 years time (and I still chuckle when I remember how much fingernail biting I did over the "high" premiums I paid for those coins at the time.   But this was my first toe-dip into PM's and I was cautious and not willing to "risk" much money on them.

The first gold bullion I purchased was at the same time, January 2010.  I bought a single 1/10 ounce gold maple.  That coin has matured nearly 18% since that time (even at today's "suppressed" prices).  So again, I have retained my purchasing power in that coin, which had a pretty significant premium.  That one was a bit of a nail-biter for me as well.

Both of the examples above include the cost of shipping, by the way.

The silver and gold I bought in the last 12-16 months are largely underwater at this time (though silver from January 2011 is still positive, and silver from mid-December 2011 is doing well.  Gold from before August 2011 is well into the green).  Again, this is even at todays "suppressed" prices and accounting for premiums and shipping.

So my outlook is that, yes, over the short term, you may not retain purchasing power.  But over the long term (18 - 24 months or longer), purchasing power appears to be retained quite nicely.  Since I have no need to sell anytime soon, and I'm still buying dips with both hands when I have cash, I anticipate being underwater overall for quite some time (generally new purchases are immediately underwater due to shipping and premiums).  But I think in the long run, I have made the wise decision and will protect my purchasing power over time, just not over a fairly short time.

Excalibur's picture

Roman Stash

Must get out with a metal detector more. I wonder how many of our stashes will be lost for generations......

http://www.telegraph.co.uk/culture/culturenews/9161483/Hoard-of-30000-silver-Roman-coins-discovered-in-Bath.html

bucktooth's picture

Honeyvillegrain -- Long term food supplier

Just out -- 15% off on enire order -- 3/22/12 through 3/27/12 -- coupon code 'BLOOM'

http://store.honeyvillegrain.com/

I have purchased items from these folks before and they delivered what was ordered in a timely fashion.  

bucktooth

cpnscarlet's picture

@RRJJ - Even an infinite

@RRJJ - Even an infinite resource cannot undue the stupidity of the Fed or the evil of tyrants. I'm much longer PMs than oil.wink

SRSrocco's picture

REPLY....TO CPNSCARLET

Yes, I do realize I sound like a LUNATIC when I mention Ed Dames, but furthermore... the future SOLAR FLARE activity has been also documented by NASA.  If we wait around and gamble whether or not it takes down the system... I PLACE MY BETS on the worst case and prepare for it.  If not...SO THE HELL WHAT.

I also have to AGREE to DISAGREE with you on ABIOTIC OIL.  I am surprised that you don't see the merit in the declining EROI as another data point to disprove abiotic oil.  If indeed these wells were refilling, then we would not be using horizontal drilling 2-5,000 feet below the surface along with hydraulic fracking to get to more oil.

The one thing that ABIOTIC OIL folks miss is when this supposed oil comes from deep down in the mantle, it would have been subjected to high heat that would have made it into Natural Gas Liquids or Methane.  A typical refinery does this process.   Oil molecules go from COMPLEX to SIMPLE by high heat.... and not the other way around.

I do believe in Abiotic theory as it creates small amounts methane, but not oil.  Again, if oil came from HIGH HEAT which is down deep, it would have been turned into gas-liquids.  Only under a certain temperature range and pressure can complex oil molecules form.

cpnscarlet's picture

@SRSrocco - Just to clarify,

@SRSrocco - Just to clarify, I see a great deal of merit in EROI as a gauge of where the economy is heading. I don't believe, however, it's an absolute proof against abiotic oil.

The only thing I must take issue with is your claim that NASA has "documented" future solar activity. NASA makes forecasts of space weather based on various solar cycles. However, like with terrestrial weather, they set probabilities as to how ferocious the weather will be. No one can see that future either.

tmosley's picture

SRSrocco

There are deep-dwelling microbes that reduce hydrogen and methane, etc into long chain hydrocarbons.  These have been proven to exist.  Hydrogen can be cracked from water via radiation, which is certainly present in the depths of the crust.

It is just unlikely that they produce fast enough to be of any value, as you noted.  What is DOES mean is that there may be additional oil fields that are deeper, or in places that we don't normally look for oil.  Probably 99% of the usable hydrocarbons produced by those deep dwelling microbes just comes out of the surface.

Dr G's picture

pourty, I sure enjoyed your

pourty, I sure enjoyed your post. Thanks for sharing those personal examples with us.

jem's picture

@bugsy I saw that too.  Might

@bugsy

I saw that too.  Might have been on Silverdoctors.  The trailer for a new documentary that is not out but will be soon.

Baikalic's picture

@cpnscarlet, magpie, SRS, and others in the peak oil chat

I'm glad we're seeing pretty civil discussion of peak oil. Outside of one other community I invariably see the mudslinging begin right at the outset of any mention of peak oil, so this is great.

Things I'd like to add:

1) The concern that big oil is playing the scarcity card for financial gain would definitely seem to be in their interest, and perhaps the interest of significant oil exporters such as the KSA, Russia, UAE, etc. However, this would not square with what has happened to the oil supply during price spikes. For instance, in 2008 the $143 spike did not bring a significant additional amount of oil to the market. If big oil/exporters wanted to take advantage of the spiking prices, why didn't they? Several other spikes since 2008 have occurred with similar behavior. This suggests to me that there really is no additional capacity left in the world - everyone is producing flat out, and could not produce much more if they wanted to.

2) Yes, political leadership and economic ponzis are getting the most attention as far as identifying what is wrong with our way of life. But those human flaws have always been with us. Why would they be breaking the back of civilization now? My hypothesis is that cheap oil (and energy) has been a necessity for the economic growth of industrial civilization. Its gradual disappearance in the past four decades and dramatic fading away in the 2000s (the likely peak decade) is a major factor in the economic troubles that were always threatening us, but now openly stalk the globe.

3) One has to trust their BS radar and instincts on finding truths. If one accepts that all "official" statistics, media news, and all other manner of information out in public domain is manufactured by TPTB, then we really don't have much to work with to make meaningful conclusions about the world. I'm not quite that skeptical, and I keep my BS radar on at all times and my instincts sharp to sift through the information deluge. That deluge is telling me that there is an energy supply problem that is exacerbating existing political and economic fragilities that have never really gone away, but are now being amplified.

4) I, like SRS, believe abiotic methane. to be plausible. But the oil window in petroleum geology (~7000 to 15000 feet only) would suggest that it would not survive a trip from the mantle.

What say you?

ClinkinKY's picture

@ amsterdam2000--re South Park

Most topical show on TV. "Just kill yourself":)

Dracula's picture

What to stash

What if for some reason US cannot import anything from China? For example, let's say they will be on Iran side openly. Or they will want to be #1. Or whatever. What will you be able then to buy in the store? What is still produced in US?

It will take YEARS to build factories to cover apart, but not all of the demand. So, you better stash light bulbs, clothes, pretty much anything is made in China.

Hawk's picture

Winston

I think I know who this is! 

¤'s picture

Are you surprised?

New counterterrorism guidelines permit data on U.S. citizens to be held longer

https://www.tfmetalsreport.com/comment/145863#comment-145863

I Run Bartertown's picture

Winston

He solves problems.

Turd Ferguson's picture

Well, this is certainly thought-provoking

MODERATOR

Dear CIGAs,

According to Dean Harry Schultz, the way to live your life involves the following:

- Money in one country 
- Citizenship in a different country 
- Body in another country where neither your citizenship nor money resides.

I have resisted this sage advice from Harry for many years knowing that the day might come when his genius proves true.

That day has come.

Seriously consider this advice.

Respectfully, 
Santa

Dr Jerome's picture

ZH ?

Is zerohedge down?

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